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Market closes marginally lower

The Australian has closed marginally lower. Picture: Reuters.

A surge in the unemployment rate almost ended the Australian sharemarket's losing streak after it sparked another scramble for high yielding stocks and a sharp drop in the Australian dollar.

The S&P/ASX 200 index again rebounded from a 0.4 per cent drop to close 3 points, or 0.05 per cent, down at 5509 after the unemployment rate jumped from 6 to 6.4 per cent, sending bond yields lower.

The Australian dollar tumbled US0.8c to US92.70c and government 10-yer bond yields fell 8.4 points to 3.427 per cent after the economy shed 300 jobs last month.

Although the net loss of jobs was a negative, the data was possibly distorted by the quarterly sample change, prompting economists to remind that the overall trend was a better indicator than volatile monthly numbers.

"The forward looking indicators continue to point to a sound, if rather lacklustre, labour market," Westpac economist Justin Smirk said. "As such, within the month to month volatility of the survey an average employment gain of around 10k to 15k per month is still the most likely outcome over the next few months."

The Shanghai composite index was down 0.7 per cent at the close of the ASX while Japan's Nikkei index rallied from the red to a 0.3 per cent gain.

Last night European stocks but finished off the day's lows and the US S&P 500 index closed flat after German factory orders plunged 3.2 per cent and Italy dropped back into recession with a 0.2 per cent decline in its June-quarter GDP.

Peripheral eurozone bond yields also missed the reach for safe-haven assets which continued to rise on in line with US high yield corporate bonds as caution crept through credit markets.

Sentiment was undermined in the US where 21st Century Fox withdrew its bid for Time Warner, sending the media stock tumbling 12.8 per cent, while Sprint also walked away from talks to buy T-Mobile US.

Spot iron ore rose 0.4 per cent to $US95.90 a tonne while Dalian iron ore futures were up 0.2 per cent.

Copper fell another 0.8 per cent to $US7005 a tonne and gold jumped $US17 to $US1306 an ounce.

More to come…